SANTA YSABEL: County starts collecting $3 million judgment from tribe

EDWARD SIFUENTES esifuentes@nctimes.com

The county recently began collecting a $3 million judgment against the Santa Ysabel Casino in rural North County after the tribe failed to pay quarterly fees for safety and other services under an agreement signed in 2005.

The Santa Ysabel Band of Mission Indians, which has about 900 members, struck the agreement with San Diego County as a condition of the tribe's gambling deal with the state. The money was supposed to help pay for additional law enforcement, emergency and fire services in the area.

But the casino, which has 349 slot machines, has struggled to make money and is millions in debt to creditors and the county, according to court documents.

"The county was awarded around $3 million from the tribe in an arbitration," said Gig Conaughton, a spokesman for the county. "That became a court judgement that the county used to perform a bank levy on an account owned by the Santa Ysabel tribe to enforce the judgment."

Conaughton said the process of imposing the levy was not complete. The process requires the bank to provide the Sheriff's Department a written response, but the bank has not replied, he said.

Santa Ysabel Chairman Virgil Perez declined to comment Thursday, saying he planned to release a statement on the matter soon.

The tribe's casino, near Julian, opened in April 2007, but it apparently failed to generate the kind of revenue the tribe anticipated due to its remote location and competition from larger casinos. According to court documents, the tribe never made any of the payments, about $600,000 a year, to the county.

After three years of missed payments, the county asked for arbitration negotiations in January 2010. In May 2011, retired Judge Alice D. Sullivan, awarded the county $3 million.

The county later filed a civil lawsuit in Superior Court in San Diego against the tribe to collect the money. Attorneys for the tribe did not dispute that Santa Ysabel owed the county money, but they said it owed much less, about $1.5 million, according to court documents.

The casino appears to be under considerable financial stress, according to court documents, but it was unknown Thursday whether the casino would be forced to close.

Santa Ysabel Casino, a 35,000-square-foot building overlooking Lake Henshaw, cost about $30 million to build. As of January 2010, the casino was $24 million in debt, according to court documents.

In 2008, tribal officials told the county that "the casino was having a challenge paying its bills and employees," according to a letter from the county's lead negotiator with the tribe.

The tribe's financial backers, the Yavapai-Apache Nation in Arizona, filed a lawsuit in 2010 against Santa Ysabel, claiming that the tribe had failed to make its loan payments.

Conaughton, the county spokesman, said the bank levy means that Santa Ysabel will be unable to withdraw money from its bank account until the debt is settled.

"Until the levy is resolved one way or another, the tribe should not be able to withdraw money from the account," Conaughton said. "The bank could allow it but would run the risk of being held liable for the amounts that were withdrawn."